Things continue to look up for the private equity industry in North America, while regions such as Europe continue to tread water, according to Bain & Co.’s latest global report on the industry.

The annual report by the consulting firm said private equity deal making in North America is expected to strengthen in 2013, as it builds off a productive 2012. Buyout transaction value was up 23% from 2011 to 2012.

“After really three flat years where we’ve been bouncing along here in the global private equity markets because of the financial crisis, the conditions are such that we’re likely to see growth,” Bill Halloran, head of Bain’s private equity practice in North America, said in an interview. “Particularly in the Americas.”

The report said the private equity revival would be built on continued low interest rates and attractive lending conditions for buyouts. More importantly, the report said a better exit window is expected to present itself this year as compared to the past few years where realizations were harder to navigate.

Bain’s report said more than two-thirds of 2005 vintage buyout funds have yet to return paid-in capital to limited partners and added that the number jumps to more than 90% for funds from 2006 to 2008 vintages, underscoring the necessity for firms to begin selling aging holdings.

“To really get into a strong, strong growth phase in private equity, you’re going to need exits so limited partners can commit more capital t the industry,” said Mr. Halloran.

Strategic buyers will likely come to the rescue of shops in need of distributions, according to Bain. “All indicators point to an upsurge in corporate M&A activity, from rising public equity markets and low interest rates to strong corporate balance sheets and readily available debt,” the report said.

Besides that, Bain said in the report that it expects secondary deals to deepen this year, while the initial public offering pipeline becomes more accessible, compared to last year.

On the fundraising front, general partners have reasons to continue to be happy. With limited partners, especially pension plans, in need of boosting returns with bond markets and public equities contributing little, investors are expected to bump up allocations to alternative assets.

U.S. public pension funds are said to have increased target allocations to 8.3% in January from 7.5% last year, according to the report, adding that larger pension funds with assets more than $5 billion were expected to push that target higher.

Despite the likely increase in available capital, fundraising will continue to be competitive. The report estimates 228 buyout funds between North America and Europe are trying to raise $212 billion all together. And another 350 general partners between the two regions still need to come to market to raise new funds, Bain said.

“Twice as much capital is looking to be raised [this year] than last year,” said Mr. Halloran. “Some GPs will be disappointed.”

The picture painted in North America stands in stark contrast to the industry in Europe, where deal activity fell last year.

The report called 2013 deal making in Europe a “dicey proposition” due to the euro zone remaining in a soft recession as “fiscal austerity measures stifle growth.” Bain added that with sellers in Europe unlikely to “concede on price in order to close a deal,” there may be an uptick in secondary transactions this year.

In Asia, deal activity in places such as in China may slow down due to the region adjusting to a “reality of slower growth,” Bain said.

But despite the gloom, there are areas that stand out, according to Mr. Halloran. In Europe, countries such as the U.K., Germany and the Netherlands had robust private equity markets last year, and the trend is likely to continue. In China, much of the slowdown may turn itself around in the second half of this year as investors move beyond the uncertainty of a new government in the country, Mr. Halloran said.

And Europe overall could see a reversal in the near future if its own uncertainty is tackled.

“A lot of times what’s important is really just the reduction in uncertainty,” Mr. Halloran said.

About Private Equity Beat

Produced by the editors of Dow Jones LBO Wire, Private Equity Analyst and Private Equity News, Private Equity Beat provides an inside view into the latest buyout deals and emerging trends in the world of private equity. Staff writers give insight and perspective on the flow of private capital on Wall Street and around the world. Write us at vweditor@dowjones.com. For more information on Dow Jones products covering private equity and other financial markets, go to http://pevc.dowjones.com.